This paper proposes a novel static VAR compensator， which can regulate capacitor and inductor continuously. The proposed compensator uses the SPWM type inverter to regulate the voltage on the compensating capacitors and inductors directly， therefore can continuously control the compensator bi-directional outputs. It is very useful in the low and medium voltage distribution system. The compensator overcomes harmonics problem associated with the conventional thyristor controlled reactor（TCR）， and the capacity of the inverter is only 25% of its compensation capacity. The main circuit consists of three-phase four-leg inverters， which can efficiently compensate unbalanced reactive loads. Experimental results validate the compensator feasibility and efficiency.